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<br />to pay this loan as required by this contract and the promissory note, to cover all
<br />expenditures fOf operation and maintenance and emergency repair services, and to
<br />maintain adequate debt service reserves, including obtaining voter approval, if necessary,
<br />of increases in the BORROWER'S water user fees,
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<br />d. Debt Service Reserve Account. To establish and maintain the debt service reserve
<br />account, the BORROWER shall deposit an amount equal to one-tenth of an annual payment
<br />into its debt service reserve fund on the due date of its first annual loan payment and
<br />annually thereafter for the first ten years of this loan. In the event that the BORROWER
<br />applies funds from this account to repayment of the loan, the BORROWER shall replenish
<br />the account within ninety (90) days of withdrawal of the funds.
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<br />e. Additional Debts or Bonds. The BORROWER shall not issue any indebtedness payable
<br />from the pledged revenues and having a lien thereon which is superior to the lien of this
<br />loan, The BORROWER may issue parity debt only with the prior written approval of the
<br />STATE, provided that:
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<br />i. The BORROWER is currently and at the time of the issuance of the parity debt in
<br />substantial compliance with all of the obligations of this contract, including, but not
<br />limited to, being current on the annual payments due under this contract and in the
<br />accumulation of all amounts then required to be accumulated in the BORROWER'S debt
<br />service reserve fund;
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<br />II. The BORROWER provides to the STATE a Parity Certificate from an independent
<br />certified public accountant certifying that, based on an analysis of the BORROWER'S
<br />revenues, for 12 consecutive months out of the 18 months immediately preceding the
<br />date of issuance of such parity debt, the BORROWER'S revenues are sufficient to pay
<br />its annual operating and maintenance expenses, annual debt service on all
<br />outstanding indebtedness having a lien on the pledged revenues, including this loan,
<br />the annual debt service on the proposed indebtedness to be issued, and all required
<br />deposits to any reserve funds required by this contract or by the lender(s) of any
<br />indebtedness having a lien on the pledged revenues, The analysis of revenues shall
<br />be based on the BORROWER'S current rate stfucture or the rate structure most recently
<br />adopted, No more than 10% of total revenues may originate from tap and/or
<br />connection fees,
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<br />The BORROWER acknowledges and understands that any request for approval of the
<br />issuance of additional debt must be reviewed and approved by the CWeB Executive
<br />Director prior to the issuance of any additional debt.
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<br />f. Annual Statement of Debt Coverage. Each year during the term of this contract, the
<br />BORROWER shall submit to the STATE an annual audit report and a certificate of debt
<br />service coverage from a Certified Public Accountant.
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<br />7. Collateral. The collateral for this loan is described in Project Summary, Section 3. The
<br />BORROWER shall not sell, convey, assign, grant, transfer, mortgage, pledge, encumber, or
<br />otherwise dispose of the collateral for this loan, including the Pledged Revenues, so long as
<br />any of the principal, accrued interest, and late chafges, if any, on this loan remain unpaid,
<br />without the prior written concurrence of the STATE. In the event of any such sale, transfer or
<br />encumbrance without the STATE'S written concurfence, the STATE may at any time thereafter
<br />declare all outstanding principal, interest, and late charges, if any, on this loan immediately
<br />due and payable,
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<br />8, Release After Loan Is Repaid. Upon complete repayment to the STATE of the entire pfincipal,
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